Crowne Plaza hotel in downtown San Antonio on Wednesday July 5, 2006. JOHN DAVENPORT / STAFF

Crowne Plaza hotel in downtown San Antonio on Wednesday July 5, 2006. JOHN DAVENPORT / STAFF

Photo: JOHN DAVENPORT, SAN ANTONIO EXPRESS-NEWS

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Photo: Mike Fisher

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Lawsuit: Crowne Plaza is in default

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The owner of the 410-room Crowne Plaza San Antonio Riverwalk has defaulted on $59 million in loans, according to a lawsuit filed this week.

A trustee for the lender sued to have a court-appointed receiver take control of the hotel at 111 E. Pecan St. The lawsuit states the hotel's owner doesn't object to the request.

The Crowne Plaza is the just latest downtown hotel to encounter financial difficulties. The 313-Holiday Inn San Antonio-Downtown Market Square and the 146-room Hotel Indigo-Riverwalk each defaulted on loans this spring, with the latter sold at a foreclosure auction in May.

In March, the 91-room Hotel Indigo at the Alamo filed for bankruptcy protection.

Like other hotels, the Crowne Plaza has dealt with a drop-off in hotel occupancy receipts, or room revenue. It generated about $9.7 million in hotel receipts last year, down 9 percent from 2010 and off 31 percent from 2008, figures from the Texas comptroller's office show.

Scott Larsen, the Crowne Plaza's general manager, couldn't be reached for comment.

“It's an old hotel,” said Todd Walker, vice president of Source Strategies Inc., a San Antonio-based hotel consulting firm. “You can't necessarily make it perform like a similar product that's new.” The building was constructed in 1958.

The hotel had an estimated occupancy rate of 53 percent and generated revenue per available room per day of about $67 during the 12 months ended March 31, Walker said.

The hotel is owned by HEI San Antonio Hotel LP, which is affiliated with HEI Hotel & Resorts of Norwalk, Conn. HEI Hotels owns 43 properties in 16 states, the company reported last month.

National Real Estate Investor ranked HEI Hotels as the 22nd-largest hotel owner, with 10,444 rooms as of Dec. 31.

This marks the second time in less than two years that the HEI partnership has been sued for defaulting on loans made in 2006.

In the latest action, filed Tuesday in state District Court, the lender asked for the appointment of a receiver to operate the property, to increase occupancy and to “stabilize the value pending foreclosure or sale,” the lawsuit states.

According to the suit, the hotel owner acknowledged defaulting on the loans and “threatened not to pay employees or vendors.”

“Any disruption in payroll or vendor-service would clearly have a devastating impact on the continued use of the property as a functioning hotel and on employee morale,” the suit says. “This, in turn, would substantially diminish the value of the property, likely at a precipitous rate.”

But the suit also says the borrower has consented to the appointment of a receiver.

Just about a year ago, the HEI partnership sued the Bexar Appraisal District seeking a reduction in the appraised value of the hotel and the hotel parking garage. The hotel and garage were originally appraised at $38.9 million and $4.5 million, respectively. The two sides were able to reach a settlement.

For 2012, the hotel is appraised at about $29 million, while the garage still is appraised at about $4.5 million.